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Wills, Estates, Trusts Law
 
The Impact of the Family Law Act (FLA) and Part V of the Succession Law Reform Act (SLRA)
 

Equalization (FLA)

 

Please note that only a legally married surviving spouse is entitled to elect for a claim of equalization under the Family Law Act (FLA) or entitle to intestacy distribution under the Succession Law Reform Act (SLRA). Common law spouses, historically, have not been proffered too much codified protection other than Part V of SLRA (dependant’s relief claims), and limited protection under some common law doctrines such as unjust enrichment and constructive trust.

Pursuant to the Family Law Act, when a spouse dies, no distributions can be made out of the estate during the six-month period immediately following the deceased spouse’s death without the surviving legally married spouse’s written consent; or a leave from order.

A surviving legally married spouse is entitled to claim equalization under Part I of FLA in lieu of the entitlement under the Will. He/ she is to be deemed to have pre-deceased the testator a day in advance.

The equalization claim has priority over:

  • gifts made under the will, unless made for valuable consideration;

  • a person’s right to a share of the estate under Part II of the if the deceased died without a Will; and

  • orders made against the estate under Part V of the , except orders in favour of a child of the deceased spouse.

Gifts under a Will that have been made in accordance with a contract entered into by the deceased spouse in good faith with an innocent party and for valuable consideration will take priority over the equalization claim, except to the extent that the value of the gift, in the court’s opinion, exceeds the consideration, determined at the time of the deceased spouse’s death.

However, there’s a set-off requirement if the surviving spouse decides to take under equalization entitlement instead. Unless the deceased spouse has otherwise designated in writing, such an election will require the surviving spouse to set off against the equalization claim:

  • any benefits to which the surviving spouse is entitled as a named beneficiary of the proceeds of any policy of insurance owned by the deceased spouse on the deceased spouse’s life, as well as the proceeds of any group policy under which the deceased spouse is a member;

  • any benefits to which the surviving spouse is entitled as a named beneficiary of a lump-sum payment provided for under a pension or similar plan on the death of the deceased spouse (FLA, s. 6(6)); and

  • the value of any property or a portion of any property to which the surviving spouse becomes entitled by right of survivorship or otherwise on the death of the deceased spouse.

 

What is the Surviving Spouse’s remedy if the Equalization Election Proved to be a Bad Choice?

The surviving spouse who elects to make an equalization claim does not forfeit any entitlement under Part V of the SLRA (dependant’s relief provisions). As a pre-condition, the deceased spouse, whether dying testate or intestate, not have made adequate provision for the dependant. Odd?

This could happen if the testators bequeathed a huge amount of money to the surviving spouse in the form of life insurance proceeds and pension funds, and he/ she elected to claim equalization. The surviving spouse would not be entitled to anything under the Will. The surviving spouse would not be entitled to anything under equalization entitlement as well as the set-off of the life insurance proceeds and pension funds far exceed what she was entitled under equalization.

In the case where a surviving spouse’s election to make an equalization claim turns out to be a serious mistake, the Part V of SLRA (dependant’s relief claims) will become available to him/ her. However, do note that the surviving spouse has six-months to make her election, so a situation like that would never happen if proper legal advice was obtained before he/ she make the election!

An election to claim equalization shouldn’t be made lightly without the full appreciation of the full financial picture of the estate, so an inform decision can be made. And seeking good and sound legal advice is a must beforehand.

HTW Law can help. Call us now at 647-849-6582 or send us a message if you have some legal questions / inquiries or want to schedule an appointment with HTW Law.